Duty Free Allowances

Treasury written question – answered on 21 March 2023.

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Photo of David Mundell David Mundell Conservative, Dumfriesshire, Clydesdale and Tweeddale

To ask the Chancellor of the Exchequer, if he will make an assessment of the potential impact of the withdrawal of tax-free shopping for passengers travelling to non-EU destinations on spending by non-EU international visitors since 1 January 2021; and what data his Department holds on spending by non-EU international visitors (a) in each of the five years before and (b) since 1 January 2021 in (i) France and (ii) Italy.

Photo of Victoria Atkins Victoria Atkins The Financial Secretary to the Treasury

The Chancellor announced on 17 October 2022 that the Government will not be proceeding with plans to introduce a new VAT-free shopping scheme.

Introducing VAT-free shopping would come at a significant fiscal cost as it would subsidise a large amount of tourist spending which already occurs without a tax relief in place.

The independent Office of Budget Responsibility published their assessment of the withdrawal of the previous VAT-free shopping schemes in November 2020. This showed that the withdrawal of VAT-free shopping would raise a significant amount of revenue and have a limited behavioural effect on decisions to visit, or spend, in the UK.

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